Thursday 25 December 2014

Iron man Si Elliott takes VW to pole position

Published 24/01/2013 | 05:00

Hard to decide if supremo is a football man in the motor business or a motor man in the football business, writes Mark Keenan

'PAY Si Elliott Whatever He Wants' is the title of a long- running thread on the 'Blast Furnace' – an online chatter site for fans of the Scunthorpe United football team.

It seems that supporters of 'the Iron' are clamouring for the return of their former club director and think the club should do whatever it takes to get him back.

But 'the Iron' can't have their old director back just now – because Simon Elliott has just requested a renewal of his contract with another team – Volkswagen Group Ireland.

He's just concluded a first three-year stint as managing director, during which he's managed to steer the flagship brand to the top of Ireland's car sales premiership.

SIMI figures

The latest SIMI figures show that, with 12.67pc of the Irish market in 2012, Volkswagen has just become the top selling car marque in Ireland – something it never managed to achieve in Ireland ever since the first "Irish" Beetle trundled out of the O'Flaherty family's Ballsbridge premises in 1950. This has been engineered through some of grimmest years for the industry in living memory.

For Elliot, the 2012 "result" might vaguely approach his favourite ever moment in life – when Scunthorpe went one nil up on Chelsea in the 2005 FA Cup and he was on the sideline.

"The place went mental, I hugged the nearest person to me, who happened to be Sven Goran Ericsson."

Next he hopes to achieve the number one model slot for the Golf which just missed this time around – 3,360 Golf sales for 2012 left it within a cat's whisker (338 units) of knocking the Ford Focus off the top spot. With an all-new Golf launching, it's all to play for in 2013.

The four VW Group Irish brands – VW, Audi, Skoda and Seat – increased share from 22.5pc to 25.5pc from 2010 to 2012. In 2010 gross turnover was €357m rising to €425m in 2011.

Although the total for 2012 was marginally down at €422m, the company will be happy with its lot given that scrappage ended in 2011 and the market shrinkage of 10pc overall since then.

"Essentially we've been chasing a bigger slice of a fast shrinking cake," he says.

But many in the sector claim that VW has taken a Chelsea approach by spending its way to the top of the league.

While the motor industry in Ireland has been contracting rapidly with a rash of much publicised casualties along the way, the Germans have been spending large in search of market share.

Last year they shelled out €90m to develop their 90-strong dealer network. Now they're planning to spend another €10m in 2013 on a shiny new headquarters for Audi at Dublin's Sandyford. Sponsorships abound with Shamrock Rovers, Sligo Rovers and Bray Wanderers all covered by VW Group brands.

"We needed to invest to get the Irish operations up to standard. In fact the Audi headquarters' money was earmarked from last year's budget. But with the market expected to fall again this year, the big spend is pretty much over and 2013 will be largely a year of consolidation for us."

While the Germans bodged the timing of their entry to the Irish market in 2008 – the high tide point of the Irish motor industry after which it fell off a cliff – they've been spending ever since.

"I'd say if they could do it over again they'd have waited until the worst of the recession was over. But everyone makes mistakes and it's how you recover form that counts most."

Elliot's predecessor Paul Willis caused widespread consternation with his root and branch overhaul which saw an ascendancy of largely foreign executives purging the network of non-VW practices.

Effectiveness

"You could say that Paul was a bit of a Sam Allardyce type boss. He certainly took no prisoners. But ultimately his changes were about improving effectiveness. The sales figures that followed showed that Paul was exactly the right man for job at that time."

Indeed VW pre-tax profits hit €3.4m in 2011, up from €1.34m in 2010.

Another advantage of being a global corporation with annual revenues of €160bn, is that you can bring your own bank to the party. "I'd say the Volkswagen Bank has given us an edge worth 10pc on sales."

Who would have thought that the Germans would be rushing to lend us money? The VW bank now employs 35 people at its Irish HQ in Leopardstown. Mr Elliott estimates that it loaned €127m to Irish customers last year with an acceptance rate of 75pc. This accounted for around 8,000 loans last year.

Mr Elliott also claims the VW bank has been instrumental in changing the method by which Irish people acquire their cars – citing a drift to Personal Contract Purchase plans (PCP) which allows the customer to make an initial payment, followed by a series of monthly payments and finally, a large but optional payment to acquire the car.

"PCP plans have more than doubled to 30pc of VW Bank lending, indicating that the Irish motorist is becoming more comfortable with it."

Like a doughty football manager, Si Elliott is also prone to stand up for his poorest performers. While VW, Audi and Skoda are all playing a blinder, why does VW Group insist on sticking with SEAT which accounts for just 2pc of the market even despite best marketing efforts?

Can they not accept that the Spanish/German cross is a lemon brand for the Irish buyer? That no amount of marketing can sweeten it?

"In fact it might surprise to learn that so far this year, the SEAT has been our best selling brand. The SEAT brand has had its problems with many models priced incorrectly. But the company has been ironing out those issues."

Extra mile

In his previous position as head of commercial vehicles in the UK, Elliott became known for going that extra mile on behalf of the underdog. Most notably he got behind the wheel of a VW caddy van and took it racing at Silverstone amidst much initial mirth.

While Mr Elliott's high roofed van looked out of place racing against the svelte hot hatches, a best fourth place finish saw Elliott demonstrate to Britain's 'white van man' that he too could have a performance motor. Regular marketing just can't buy this sort of stuff.

Football fans seldom rally behind a 'suit'. At Scunthorpe, while simultaneously involved in the UK motor sector, Elliott was the business brain for manager Brian Laws.

The duo were behind a glorious period in the club's history when they drove the team from certain Conference league relegation to the middle of League One over just three seasons while paving the way for their ascendancy to a Championship place the following year.

Elliott made a name for acquiring top players for a pittance and then selling them for a big profit. His deals included Billy Sharp – bought from Sheffield United for a hundred grand and then sold back to the same club two years later for two million.

He peddled our own Andy Keogh (bought for 60k, sold for 600k). Elliott's financial prowess meant that the club became one of the few not burdened by debt.

The football-mad son of a Scunthorpe Council executive (he also played cricket twice for Lincolnshire), Elliott started working as an office clerk at age 17 so he could "buy a motorbike".

At 19 he was taken on by Volkswagen in Milton Keynes with his first task being to sell vehicles to prudent Scottish dealers. He moved to Toyota UK just prior to it opening production facilities in the UK and went on to become commercial director for the company and for Lexus in Belgium.

He then moved over to play for the Americans, becoming UK managing director for the Chrysler brand before moving to China for two years as that country's brand president.

He was awarded with the Chinese "dealer of the year" for the ground he made for Chrysler there – what he considered his best achievement in the motor sector. He later returned to Britain with Chrysler before moving back again to Volkswagen.

He's got clear views on what's wrong with the sector here: "The Government needs to abolish VRT. Doing so will increase sales and thus the tax take for Government which will earn more by doing away with it. We now have a problem with a lack of used cars."

So what will 2013 bring for VW Group?: "A new Golf, a new Leon and a new Octavia and we're talking about genuinely different cars here, not the same cars with slight tweaks." He cites new technologies on the way – a car which can switch from a 1.4 to 700cc capacity to save fuel and a sensor alarm which prevents drivers falling asleep at the wheel.

Dabbled

With that he takes a call from Ian Barraclough, current manager of Sligo Rovers and former Scunthorpe player. "He's probably looking to pick my brain."

So is Simon Elliott a football businessman in the motor business or a motor businessman who has dabbled in the football business?

He laughs. "The latter I suppose, but as it happens, they're both very similar businesses and the exact same principles apply: No matter how bad things are looking, you've got to go out there with the team and the resources you've got.

"You've got to inspire your team, play on your strengths and deliver a result. You've always got to believe you can do it. If you don't shoot, you can't score."

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